Ashland To Separate into Two Companies
The board of directors of Ashland Inc. has approved a plan to separate Ashland into two independent, publicly traded companies, respectively called Ashland, focused on specialty chemicals, and Valvoline, focused on supplying lubricants to the engine and automotive markets.
“Ashland is fortunate to have two strong, but distinctly different, business platforms with attractive growth opportunities and experienced leadership teams,” said William A. Wulfsohn, Ashland chairman and chief executive officer (CEO), in a company statement. “We believe that separating into two industry-leading public companies, one focused on specialty chemicals and the other focused on high-performance lubricants, will generate significant value for shareholders by enabling each company to focus on its specific business and strategic priorities. For the new Ashland, that means becoming a ‘solutions destination’ for a wide range of consumer and industrial customers through the delivery of value-added technology and world-class operations. For Valvoline, it means building the world’s leading engine and automotive maintenance business by providing hands-on expertise to customers around the world. Each company will be a leader in its respective industry, with the capital structure, financial resources, and capital allocation strategies to drive greater revenue and earnings growth.”
The new Ashland will focus on providing specialty chemical solutions to customers in a consumer and industrial markets. These markets are currently served by Ashland’s Chemicals Group, comprising Ashland Specialty Ingredients and Ashland Performance Materials. Key markets and applications include pharmaceutical, personal care, food and beverage, architectural coatings, adhesives, automotive, construction and energy. Together these businesses generated approximately $3.6 billion in sales for the 12 months ended June 30, 2015.
Wulfsohn will serve as chairman and CEO of the new Ashland following the separation, and Luis Fernandez-Moreno, currently senior vice president of Ashland and president of Ashland’s Chemicals Group, will be chief operating officer of the new company. Kevin Willis, currently senior vice president and chief financial officer of Ashland, will serve in the same capacity in the new Ashland.
Valvoline will focus on engine and automotive maintenance markets by providing hands-on expertise to customers in each of its primary market channels: Do-It-Yourself (DIY); Installers; Valvoline Instant Oil Change; and International. The Valvoline brand generated sales of $2 billion for Ashland in the 12-month period ended June 30, 2015. Valvoline currently ranks as the number two quick-lube chain and number three passenger car motor oil brand in the United States. The brand operates and franchises approximately 940 Valvoline Instant Oil ChangeSM service centers in the United States. As an independent publicly traded company, Valvoline will focus on growing its network of Valvoline Instant Oil Change stores.
Wulfsohn will serve as non-executive chairman of Valvoline following the separation, and Sam Mitchell, currently senior vice president of Ashland and president of Valvoline, will serve as CEO.
Ashland will begin the process to separate its specialty chemicals and Valvoline businesses while it finalizes the transaction structure and obtains customary regulatory and other approvals. The company intends for the separation, which is subject to final board approval prior to completion, to be tax free for Ashland shareholders. Immediately following the separation, Ashland shareholders will own shares of both the new Ashland and Valvoline.